Washington, D.C.— Today, the House Small Business Committee, led by Chairwoman Nydia M. Velazquez (D-NY), passed four bipartisan bills to make critical changes to the Small Business Administration (SBA) 504 and 7(a) lending programs and to improve the appeals process in the HUBZone federal contracting program.
“Prior to the Coronavirus, the Committee held numerous hearings and roundtables to learn what is working and what needs to be improved at SBA,” said Chairwoman Velázquez. “Today, our Committee passed bipartisan bills that will make a difference in the lives of entrepreneurs by putting more capital in their hands by improving key lending programs and making the federal contracting process fairer and more transparent for small businesses.”
H.R. 7903, “To amend the Small Business Act to establish the Community Advantage Loan Program”
Introduced by Rep. Judy Chu (D-CA) and Rep. Ross Spano (R-FL)
The bill would authorize the Community Advantage (CA) program for five years (FY21-FY25). In addition to access to the 7(a) guaranty, the bill also requires SBA to provide free or low-cost in-person and online training upfront and on an ongoing basis to Community Advantage lenders. Rep. Spano introduced an amendment that would add areas impacted by a natural disaster to those eligible to receive CA financing and require SBA to disaggregate CA loan performance reporting by credit score. Rep. Jason Crow (D-CO) offered an amendment to increase the portion of a CA lender’s loans, which must be made to “underserved” small businesses from 60% to 75%. Both amendments were adopted.
H.R. 8211, “504 Modernization and Small Manufacturer Enhancement Act of 2020”
Introduced by Rep. Angie Craig (D-MN) and Ranking Member Steve Chabot (R-OH)
This legislation increases the maximum loan amount for manufacturing loans from $5.5 million to $6.5 million and requires SBA District Offices to partner with SBA Resource Partners to provide entrepreneurial development assistance to small manufacturers. The bill also provides decreased project costs for small manufacturers and increases the job creation/retention requirements for small manufacturers. The bill adjusts collateral requirements, and debt refinance parameters for small manufacturers. The bill would streamline numerous administrative processes associated with the 504 loan closing process by allowing accredited CDCs to perform numerous closing-related tasks, such as correcting any borrower or lender information on loan documents. The bill also creates an “Express” loan closing program for 504 loans less than $500,000. Rep. Chu introduced an amendment to make the 504 Refinance Loan Program permanent. The amendment also increases the debt refinancing permitted under the program, expands the definition of debt that can be refinanced, and offers an alternate job retention goal for the program. Ranking Member Chabot introduced an amendment to add “the expansion of small business concerns with 10 or fewer employees” as an additional public policy goal to the permissible goals used to justify making a 504 loan. Chairwoman Velázquez offered an amendment to update occupancy requirements for 504 financed projects. The amendment would open up the 504 program to more small businesses operating in two-story and multi-story buildings. All the amendments were adopted.
H.R. 8199, “504 Credit Risk Management Improvement Act of 2020”
Introduced by Rep. Dan Bishop (R-NC) and Rep. Angie Craig (D-MN)
The bill shifts loan closing file review responsibilities to the Office of Credit Risk Management (OCRM) and allows SBA to charge CDCs a fee to cover the cost of oversight, which becomes effective one year after enactment. The bill also clarifies OCRM’s duties, as well as the enforcement actions OCRM may take against a CDC, which are aligned with those enacted under the 2018 7(a) Oversight Act. The bill also includes penalties for CDCs who submit required annual reports to SBA more than 30 days late. The bill also directs SBA to issue rules for CDC compliance with the National Environmental Policy Act of 1969.
H.R. 8229, the “Parity for HUBZone Appeals Act of 2020”
Introduced by Rep. Aumua Amata Radewagen (R-AS) and Rep. Chrissy Houlahan (D-PA)
The bill directs the Small Business Administration (SBA) to issue regulations, no later than a year after its enactment, to grant the Office of Hearing and Appeals (OHA) jurisdiction over HUBZone status appeals. The purpose of the bill is to achieve parity and uniformity of appeal processes between the HUBZone Program and the Service-Disabled Veteran-Owned Small Business (SDVOSB) and Women-Owned Small Business (WOSB) programs by shifting the responsibility to hear HUBZone status appeals from the Associate Administrator of the Office of Government Contracting & Business Development (AA/GCBD) to OHA. Moreover, providing OHA with jurisdiction over all program status appeals promotes efficiency and guarantees expertise. Finally, it would encourage transparency and consistency in opinions since OHA opinions are published.
All four bills passed unanimously on a bi-partisan basis.
For video of today’s markup, click here.